1. LDGGA Grower Meeting Winegrape Market Update Nat DiBuduo Allied Grape Growers January 8, 2015

2. Industry Update Today’s Talking Points: Today’s Talking Points: Wine Shipments Wine Shipments Imports/Exports Imports/Exports Production/Supply Production/Supply Market Demand Market Demand Vineyard Sales and Pullout Activity Vineyard Sales and Pullout Activity

3. Wine Shipment Trends

5. 2014 Wine Shipment Trends: 2014 Wine Shipment Trends: California Shipments up 4% California Shipments up 4% “Big 3” Shipments are down 1% “Big 3” Shipments are down 1% Coastal Warehouse Shipments up 14% Coastal Warehouse Shipments up 14% California bottled exports up 5% California bottled exports up 5% California bulk exports down 2% California bulk exports down 2% Wine Shipment Trends

6. Imports/Exports

8. World Supply Courtesy: The Ciatti Company

9. Imports

10. Thru June, bulk Argentine imports were up 51% from previous year

11. Source: US Department of Commerce & Gomberg, Fredrikson & Associates Imports

12. Production/Supply

13. Winegrape Planting: Winegrape Planting: 2012 plantings for <$7 per bottle is estimated by AGG at 15,000 acres. Those will begin producing material crops by next harvest. 2012 plantings for <$7 per bottle is estimated by AGG at 15,000 acres. Those will begin producing material crops by next harvest. 2013 planting for <$7 per bottle is estimated by AGG at 20,000 acres. Those will begin producing material crops by 2016. 2013 planting for <$7 per bottle is estimated by AGG at 20,000 acres. Those will begin producing material crops by 2016. 2014 planting for <$7 per bottle will decline significantly and is expected to be <5,000 acres. AGG annual nursery survey data will be released in January of 2015 to confirm. 2014 planting for <$7 per bottle will decline significantly and is expected to be <5,000 acres. AGG annual nursery survey data will be released in January of 2015 to confirm. Winegrape Pullouts Winegrape Pullouts Estimated by AGG at 15,000-25,000 acres over this winter, preceding the 2015 harvest Estimated by AGG at 15,000-25,000 acres over this winter, preceding the 2015 harvest Supply

14. Production/Supply

15. Market Demand

16. CAGR = 1.37% Market Demand

17. 2006-2011 CAGR = 3.15% Market Demand

18. Gomberg Fredrikson Report October 2014 Quote: “California wine shipments reached an all-time high this month….nonetheless, October results were still diminished by ongoing weakness of “everyday” wine sales (up to $9 retail), which offset strong premium wine gains.” Market Demand

20. Vineyards are being sold and pulled out at record levels. Why? Vineyards are being sold and pulled out at record levels. Why? Lack of desire to fight the wine market & harvest issues. Lack of desire to fight the wine market & harvest issues. Retirement is looking pretty good. Retirement is looking pretty good. Available market demand for alternative crops at better $/acre Available market demand for alternative crops at better $/acre High values High values Plenty of cash buyers Plenty of cash buyers Land with water is being sought out Land with water is being sought outConcerns: We are loosing good vineyards & growers. We are loosing good vineyards & growers. The landscape of SJV agriculture is changing The landscape of SJV agriculture is changing Vineyard Sales & Pullout Trends

21. Take Home Message Lodi Lodi Will continue to be the backbone of the California wine industry. Will continue to be the backbone of the California wine industry. Will continue to provide the consumers daily wine with quality and a reasonable price. Will continue to provide the consumers daily wine with quality and a reasonable price. Will need to continue to strive for higher production and continuing gains in quality to meet market demands. Will need to continue to strive for higher production and continuing gains in quality to meet market demands. Needs to experience pricing step ups for growers so they can be economically sustainable. If not, the result will be the removal of wine grapes, like we have observed this winter. Needs to experience pricing step ups for growers so they can be economically sustainable. If not, the result will be the removal of wine grapes, like we have observed this winter.

22. For more information

23. www.alliedgrapegrowers.org Questions?